beta
Title
Whether the Stockholm option interest constitutes Class B earned income
Summary
If economic benefits can be evaluated as the consideration of labor provided by the employer by following the employer’s direction based on employment contracts or similar reasons, it can be deemed as labor income.
Related statutes
Article 20 of the Income Tax Act
Text
1. All appeals filed by the plaintiffs are dismissed.
2. The costs of appeal are assessed against the Plaintiffs.
Purport of claim and appeal
The judgment of the first instance court shall be revoked. The phrase “the date of the disposition” in the attached Form [Attachment] shall be as follows: “the global income tax amount for which the revocation is sought” and “the tax amount for residents seeking the cancellation” in the same Table against the Plaintiffs on each date
Reasons
1. Determination on the legitimacy of the lawsuit by the plaintiff ○○○
In this part, the reasons why a member should explain are the same as the corresponding part of the judgment of the court of first instance, and thus, it is citing it as it is in accordance with Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act (the Plaintiff’s lawsuit
2. Determination on the plaintiffs' claims other than the plaintiff ○○○ (hereinafter referred to as "the plaintiffs in this paragraph")
1. Details of the disposition;
(1) The Plaintiffs, while serving as executive officers or employees in each company listed in [Attachment List] “Domestic Subsidiaries” (hereinafter referred to as “Domestic Subsidiaries”), obtained appraisal rights (Sock options) from each relevant foreign company listed in “foreign parent company” in the same list as indicated “foreign parent company” (hereinafter referred to as “foreign parent company”), and obtained the benefits from the exercise of the options (hereinafter referred to as “the benefits from the exercise of the options”) as stated in [Attachment List] from the difference calculated by deducting the price of the options (the actual acquisition price) from the market price of the stocks as of the date of the exercise of the options by exercising the options granted as mentioned above in each year.
(2) Of the plaintiffs, the plaintiffs listed in [Contents Table] Nos. 4, 6, 29, 37, and 39 (However, the plaintiffs listed in No. 4, 6, and 29 are limited to the portions belonging to 2000 years respectively) were reported and paid to each of the defendants listed in the "defendant" (the authority of ○○○ Tax Office listed in No. 29, 37 was reverted to ○○ Tax Office before the reorganization of the organization enforced as of April 1, 2006) in the separate list No. 4, 6, 29, 37, and 39, after the end of each taxable period to which the time of exercising the Stockholm option belongs, as stated in the separate list No. 20 (b) of the Income Tax Act, the plaintiff's request for correction was not legitimate for each of the above global income tax base to be stated in the separate tax base for which the plaintiffs sought for the reduction of each of the above global income tax base and the corresponding tax base for cancellation."
(3) Of the Plaintiff, the Plaintiffs listed in [Attachment Attachment 4] Nos. 1 through 36, 40 through 47 (Provided, That the Plaintiffs listed in [Attachment 4, 6, 298 through 199] did not report and pay the resident tax to be imposed on global income tax and income tax within the statutory due date of return, deeming that the profits from the exercise of Stockholm options do not constitute taxable income. Accordingly, the Defendants listed in [Attachment 4] Nos. 1 through 36, 40 through 47 [Attachment 28] (the Defendants’ [Attachment 28] were exempt from the authority of the head of ○○ Tax Office before the reorganization of the organization, effective April 1, 2006, the authority of the head of ○○○○ Tax Office was reverted to the head of ○○○ Tax Office on the date stated in the [Attachment 4, 298 through 199] were included in each of the above Plaintiffs’ global income tax base for cancellation 20 or 400 different global income tax base.
[Reasons for Recognition] 1, Gap evidence 1-1 through 4, Eul evidence 2-1-2, Eul evidence 2-1-3, Eul evidence 2-1-2, Eul evidence 2-1-3, Eul evidence 2-1-2, Eul evidence 2-1-3, Eul evidence 2-1-3, Eul evidence 2-1-3, Eul evidence 2-1-4, Eul evidence 2-1-3, Eul evidence 2-1-4, Eul evidence 2-1-2, Eul evidence 3-1-2, Eul evidence 2-1-3, Eul evidence 2-1-4, Eul evidence 2-1, Eul evidence 3-1-2, Eul evidence 3-1-2, Eul evidence 3-1-1, 34-1-4, 36, 37-1, 38-4, 4-1-4, 5-1-4, 5-1-4, respectively.
2. Whether each of the dispositions of this case is legitimate
A. The plaintiffs' assertion
(A) The instant Stockholm is merely an incentive provided for the continued employment of outstanding human resources, and thus cannot be deemed as benefit in return for the provision of labor. No legal employment relationship or occupational direction system exists between a foreign parent company and the Plaintiffs that granted Stockholm options. The size of the profit from the exercise of Stockholm options depends entirely on whether the grantedr selects the time of the exercise of the Stockholm options, and it cannot be deemed as a payment for labor. Article 38(1)17 of the Enforcement Decree of the Income Tax Act (hereinafter “Enforcement Decree of the amended Act”) amended by Presidential Decree No. 17825, Dec. 30, 2002 provides that the benefits from the exercise of the Stockholm options shall be deemed as earned income and thus, it cannot be deemed as unlawful in light of the fact that each of the instant benefits from the exercise of the options cannot be deemed as an earned income under the premise that each of the instant benefits from the exercise of the options was made before its interpretation.
(B) Even if each of the Stockholm options benefits of this case can be seen as earned income, it is not clear whether the benefits from the Stockholm option exercise are subject to taxation because of its ambiguous legal nature, and it is taxed at the time when the period for exclusion of the right to impose on the profits from the Stockholm option exercise in the attached Table 2, 8, 10, 28, 29, 41 through 47 expires. If the above Defendants exercised the right to impose tax from the first taxable period, they were indicated in the attached Table 2, 8, 10, 28, 29, 41-47 in order to avoid the burden of additional tax, and in light of the above circumstances, the above Plaintiffs were dissatisfied with the payment of tax in advance in order to avoid the burden of imposing additional tax. In light of the above circumstances, the above Plaintiffs failed to report and pay in advance the income tax on the profits from the use of the Stockholm option of this case, and thus, the Defendants’ imposition of additional tax is unlawful.
(b) Related statutes;
[Income Tax]
Article 20 (Earned Income)
(1) Earned income shall be the following incomes generated in the corresponding year:
1. Class A:
(a) pay, pay, remuneration, annual allowance, wage, bonus, bonus, allowance, and other benefits of a similar nature, which are received for furnishing labor;
2. Class B:
(b) Pay received from a foreigner or foreign corporation located abroad (excluding a domestic branch or domestic business office).
Article 24 (Calculation of Gross Amount of Income)
(1) The total amount of income of a resident shall be calculated based on the total amount received or received in the relevant year.
(2) In cases under paragraph (1), if any income other than money is imported, such income amount shall be calculated according to the value at the time of transaction.
Article 39 (Accretion Year, etc. of Gross Income and Necessary Expenses)
(1) The year to which the total income and necessary expenses of a resident are reverted shall be the year in which the total income and necessary expenses are determined.
[Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 17825 of Dec. 30, 2002)]
Article 38 (Scope of Earned Incomes)
(1) The scope of the employment income under Article 20 of the Act shall include the following incomes:
17. Profits (referring to the difference between the market price and the actual purchase price at the time of exercising the stock option, and including the preemptive right at the time of week) accruing from exercising the stock option granted to an officer or employee of the relevant corporation or a corporation having a special relationship under Article 87 of the Enforcement Decree of the Corporate Tax Act with the relevant corporation (hereafter in this subparagraph, referred to as the “relevant corporation, etc.”);
Article 49 (Receipt Date of Earned Income) (1) The receipt date of the total labor income shall be the following dates:
1. Salaries;
The Labor Day;
(2) Notwithstanding the provisions of paragraph (1) 1, if the relevant benefits are not determined before the beginning of the period for final return on the tax base of the relevant taxable period, it shall be deemed to have been imported on the fixed date: Provided, That the amount actually received before the date of final return on the tax base of the relevant
Addenda
○ Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2003: Provided, That the amended provisions of Articles 38(1), 62(2)2, 63, 64 (excluding subparagraph 5 of paragraph (1)), 143(3)1, 146-2, and 208-2(4) shall enter into force on the date of its promulgation.
Article 5 (Application Cases concerning Scope of Earned Income)
The amended provisions of Article 38 (1) shall apply to the portion of income generated in the taxable period to which the date of promulgation of this Decree belongs.
[The Regulation of Tax Reduction and Exemption Act (amended by Act No. 5195, Dec. 30, 1996)
Article 13-2 (Special Taxation on Stock Options)
(1) The profits (referring to the difference between the actual purchase price and the market price of the stocks, and the stocks shall be deemed to include preemptive rights) which an employee gains by obtaining stock option meeting the requirements set forth in the following subparagraphs from a domestic corporation prescribed by the Presidential Decree as a founder or a new technology businessman, or from a listed corporation or off-the-board registered corporation meeting the requirements set forth in the Presidential Decree (hereafter in this Article, referred to as a “business start-up corporation, etc.”) shall not be regarded as
(c) Fact of recognition;
(A) A foreign parent company listed in the separate sheet (a list of companies) granting Stockholm options to the Plaintiffs had shares of 55% or 100% of the shares as stated in the separate sheet (a list of companies) with respect to each corresponding domestic subsidiary for which the Plaintiffs work.
(B) The Stockholm options grant subjects selected and arranged by a foreign parent company in accordance with the Stockholm options Assignment Plan that the foreign parent company voluntarily prepares. There are many cases where a domestic subsidiary selects subjects and recommends them to a foreign parent company. However, without such recommendation procedures, a foreign parent company directly selects subjects based on the results of service of officers and employees reported through a domestic subsidiary.
(C) There are somewhat differences in the purpose, type, exercise price, time of exercise, etc. of the Stockholm options for each foreign parent company. Even if the Stockholm options granted by the same foreign parent company are granted, the type, exercise price, time of exercise, etc. vary depending on the position of the executive officer or employee who is the other party or the point of assignment, but the Stockholm options granted by the plaintiffs have the following common characteristics as a substitute.
1) The purpose of Stockholm options is to secure human resources who are fit for the position practically responsible, to provide them with additional incentives, and to promote the success of the company's business by lowering the economic benefits of the Plaintiffs, who are employees, with the value according to the long-term holding of shares.
2) The time of the exercise of the Stockholm option is determined so that it can be exercised in full after a certain period of time has elapsed from the date of grant, or that it can be exercised at a certain rate every year or every six months after a certain period of time has elapsed from the grant date, and it is required to work at a domestic subsidiary for the future period determined by the board of directors of the foreign parent company in order to exercise all or part of the Stockholm options granted to the Plaintiffs.
3) The Plaintiffs acquired the shares of a foreign parent company at the pre-determined exercise price by exercising Stockholm options. The exercise price is ordinarily set at or higher than the market price as of the time of granting Stockholm options. In any case, the Plaintiffs may benefit from exercising Stockholm options at a price lower than the market price by exercising Stockholm options at the time when the foreign parent company’s share price was set at a higher than the market price. Accordingly, the foreign parent company, as of the date of the exercise of Stockholm options, determines that Stockholm options may be exercised at a price lower than the market price when the share price was set at a lower than the market price. Accordingly, the foreign parent company, as of the date of the exercise of Stockholm options, determines that the share price as of the date of the exercise is at a lower rate than the market price as of the date of the exercise.
4) Stockholm options may be exercised while the Plaintiffs maintain their status as a domestic affiliate employee, and in the case of retirement, the Stockholm options may be exercised within a certain short period of time after retirement to the extent of the number of shares available at the time of retirement to the extent of the number of shares available for exercise of rights.
5) The Plaintiffs cannot transfer or dispose of Stockholm options by means other than wills or inheritances, and only the Plaintiffs may exercise Stockholm options during their existence.
(D) Until the Enforcement Decree of the Income Tax Act was amended by Presidential Decree No. 17825, Dec. 30, 2002, the Income Tax Act and the Enforcement Decree thereof did not directly and explicitly provide for Stockholm options. However, the National Tax Service has expressed its view that the profits from exercising Stockholm options constitute earned income through the following established rules, etc.
(1) With respect to income on May 31, 1986, 22601-1803 and May 31, 1986: The difference between the acquisition value and market value of stocks in case where the employees of a corporation receive without compensation according to work performance records from the relevant corporation and the employees excluding members of an employee stock ownership association acquire stocks from the
(2) Income on December 27, 1995: Income earned by an employee working for a domestic branch of a foreign corporation by actually acquiring the relevant stocks through a parent company’s stock purchase right granted in relation to provision of labor (the amount obtained by subtracting the actual acquisition value at the market price at the time of acquisition) shall be taxed as earned income.
(3) On February 13, 1998: The difference between the acquisition value of stocks and the market value of stocks by granting the right to acquire stocks of a mother company or head office located overseas under certain conditions to its employees at a foreign investment corporation or a domestic place of business of a foreign corporation, at a price lower than the market price, shall constitute earned income under Article 20 (1) 1 of the Income Tax Act.
(4) Income on February 27, 1998: Where a domestic corporation and a foreign corporation having a special relationship with its employees under Article 2 of the Enforcement Decree of the Adjustment of International Taxes Act grants a right to acquire stocks of a foreign corporation at a specific price at a certain time as compensation for past service period to the employees of the relevant domestic corporation; and where the amount equivalent to the difference between the market price and the specific price at the time of the exercise is paid, such amount paid shall constitute earned income.
[Ground of recognition] Gap evidence Nos. 49-1 to 12, Eul evidence Nos. 35, Eul evidence Nos. 36-1, 2, Eul evidence Nos. 39 and 42, each of the facts inquiries about ○○ Stock Company, ○○ Stock Company, ○○○ Stock Company, ○○○○ Stock Company, ○○○○○ Limited Company, ○○ Limited Company, ○○ Limited Company, and ○○ Limited Company
C. Determination
○ Earned income under Article 20 of the Income Tax Act
Article 20 (1) 1 (a) of the Income Tax Act provides that "the salary, salary, remuneration, annual allowance, wage, bonus, allowance, and other benefits of a similar nature that are received from the provision of labor," with regard to the scope of the earned income subject to the income subject to the income tax, in principle, includes all monetary benefits derived from the employment relationship or employment relationship in the earned income except for the retirement income, or all other benefits of economic value derived from the employment relationship or employment relationship. Thus, the same applies to "wages" under Article 20 (1) 2 (b) of the same Act.
Furthermore, the term "in the course of providing labor" under the above legal provision means that the provision of labor and the payment of wages are dealt with either a quid pro quo or a pair of benefits. The above earned income includes not only all economic benefits in the relationship of providing labor in the nature of a long-term term unit in calculating a salary, etc., regardless of whether the term exists in paying a salary, etc., or in the form of payment, etc., but also all the economic benefits in the relationship of providing labor, regardless of the form of payment, etc., but also the benefits that are regularly paid on the premise of labor (see Supreme Court Decision 2003Du4089, Apr. 15, 2005). In order to recognize that the economic benefits the employee received from the employer have a quid pro quo relationship between the quality and quantity of labor provided by the employee and the quid pro quo relationship between the labor provided by the employee and a certain correlation or a certain quid pro quo relationship with the labor provided by the employee are satisfied (see Supreme Court Decision 2005Du13135, Oct. 13, 2006).
(B) Whether the profit from the Stockholm option event is an economic benefit that was received by the provision of labor
1) According to the above, the purpose of granting Stockholm options to the Plaintiffs is to fundamentally respond to the Plaintiffs’ domestic subsidiaries and foreign parent companies’ contribution, and to encourage them to continue to work in the future. Furthermore, when granting Stockholm options to the Plaintiffs, a foreign parent company must work in its domestic subsidiaries for a certain period in the future on the condition that it would exercise in whole or in part the Stockholm options in the future, and can exercise Stockholm options during the maintenance of the status as an employee of a domestic subsidiary. When an employment contract is terminated, the exercise of rights is possible only within the limit of the number of shares available at the time of retirement, and the period of exercise is limited within a short period of time, and as a matter of principle, it is prohibited from transferring the Stockholm options itself. Furthermore, according to the above facts, the fundamental reason behind the Stockholm options system maintained is that the employee’s ability to work in the pertinent company is formed by various factors that contribute to the improvement of the market price of the relevant company’s shares, and thus, the performance of the relevant company’s labor performance is significant.
In light of the above purpose of the Stockholm option system and the method of its exercise, etc., it is naturally anticipated that the Stockholm option granted by a foreign parent company to the Plaintiffs is to secure and maintain necessary human resources by lowering the market price of the Plaintiffs’ economic benefits, while allowing the Plaintiffs, who are granted Stockholm options, to make efforts to increase the foreign parent company’s stock price through the improvement of the performance of domestic subsidiaries, and allowing the Plaintiffs to obtain the benefits of exercise by exercising the Stockholm option if the stock price increases by such efforts. In addition, the fact that the Plaintiffs are entitled to the benefits of exercise of the Stockholm option in granting the Stockholm option is an inherent factor in the Stockholm option system, and thus, it can be viewed that the Plaintiffs are granted the Stockholm option by expectationing such benefits of exercise of the Stockholm option and providing their labor to the domestic subsidiary company.
2) Meanwhile, the existence and amount of profit from the Stockholm option exercise is affected by the determination of the price change after the Stockholm option was granted and the time when the person to be given the Stockholm option was exercised, and it is difficult to view that there was a correlation between the quality and quantity of the work provided by the employee and the work provided by the employee.
However, in the event that the Plaintiffs once exercised Stockholm, a foreign parent company is obligated to deliver stocks to the Plaintiffs as the price of exercise determined in advance, so economic benefits equivalent to the difference between the market price and the exercise price as determined at the time of the exercise shall be granted to the Plaintiffs, and as a result, the Plaintiffs gain profits from acquiring stocks at a price lower than the market price. This can be said to be a result of an agreement between a foreign parent company and the Plaintiffs to the effect that the foreign parent company will transfer the economic benefits equivalent to the difference between the market price and the exercise price at the time of the exercise of the rights to the Plaintiffs at the time of the exercise of the rights. In other words, by the exercise of the Stockholm option, the Plaintiffs obtain economic benefits equivalent to the Stockholm option, while a foreign parent company, which is a company granting the Stockholm option, pays economic sacrifice equivalent to the profits from the exercise of the Stockholm option. However, such economic benefits of the Plaintiffs and the economic sacrifice of the foreign parent company, can be deemed to be in a quid pro quo relationship.
3) Ultimately, in light of the aforementioned various circumstances, i.e., the objective of the Stockholm option system to secure and maintain able executives and employees and to promote a high-quality work in the future, the indivisible relationship between the Stockholm option and the labor, the occurrence of profit from exercising the Stockholm option is an essential element of the Stockholm option system, and the relationship between the employee’s labor and the stock owner cannot be denied, etc., the Plaintiffs’ profit from exercising the Stockholm option can be deemed as having a quid pro quo relationship based on a specific correlation or an economic rationality with the labor provided by the Plaintiffs, and the fact that there is no conclusive correlation between the quality and quantity of the labor provided by the Plaintiffs and the economic interest that the Plaintiffs acquired.
(C) As seen earlier, Article 20(1)1 (a) of the Income Tax Act only provides that “the salary, salary, etc. received due to the provision of labor and other similar benefits” with respect to the wage and salary income, and does not require the same person with the employer and the payer as a premise for constituting the wage and salary income. In addition, the Income Tax Act divides the income into interest income, dividend income, real estate rental income, business income, wage and salary income, temporary property income, pension income, other income, retirement income, capital gains, and forest income. Such classification is intended to consider the difference of each taxable capacity in calculating the amount of income and applying the tax rate by classifying each income according to its source and nature. In light of the fact that there is no difference between the nature of income and the taxable capacity depending on whom the person who is liable for the payment of benefits, it is difficult to view that there is a reasonable reason to request the payment of benefits to be the same person with the employer and the person who is liable for the payment of benefits. Accordingly, the circumstances that the employer and the person liable for the payment of benefits are not in accord with labor payment.
Ultimately, as seen earlier, the Income Tax Act provides for the scope of wage and salary income in the form of an exemplary legislation, not a specific way to list it, and in view of the fact that wage and salary income is included in the wage and salary income if the substance of the wage offered and received from an employer or a person corresponding thereto falls under the wage and salary income if it is deemed that the economic benefit that the employee receives from the employer or a person corresponding thereto is a consideration for labor provided in accordance with the employer’s direction and order based
2) back to the instant case, the foreign mother company listed in the [Attachment List] is a company holding 5% or 100% shares of the Plaintiff’s domestic subsidiary with respect to which the Plaintiffs were working, and granting Stockholm options to the Plaintiffs, who are employees of the domestic subsidiary company, because the shares of the domestic parent company form part of the assets of the foreign parent company, and the performance of the subsidiary is improved by the efforts of the employees of the domestic subsidiary company, it can be considered that the increase in the company’s profits by increasing the assets value of the foreign parent company. This is consistent with the original purpose of the Stockholm options system to secure excellent human resources and provide high-quality future work, as in the case of granting Stockholm options to the employees of the domestic subsidiary company.
Therefore, considering these circumstances, it is reasonable to view that the saw options given by a foreign parent company to the Plaintiffs, who are workers of a domestic subsidiary company, are paid as compensation for non-independent labor provided based on the "employment contract or any other similar cause". In the instant case, the difference between the employer and the Stockholm options grantr does not affect the fact that the Stockholm options in this case constitute earned income.
(D) Whether the benefits from the Stockholm options can be subject to taxation
1) The Plaintiffs asserted to the effect that the final profit amount is not determined until the disposal of the stocks acquired at the time of the Stockholm option exercise and cashizing the stocks acquired at the time of the Stockholm option exercise, and thus, each of the instant Stockholm option exercise benefits cannot be subject to taxation, on the grounds that it is not subject to taxation, since it is possible to evaluate the Stockholm option itself as a right where its content has already been specifically determined, even though it is somewhat difficult to assess its content.
2) Although there may be room to view that the Stockholm option itself holds a certain economic value as the right of expectation or formation in the future. However, in order for a certain economic benefit to constitute an earned income under Article 20(1) of the Income Tax Act, such economic benefit should be recognized as constituting an income under the Income Tax Act, i.e., an economic benefit increased a tax-bearing capacity. Stockholm option itself is not a right to demand delivery of shares as a pre-sale right or a pre-sale right arising from a similar legal relationship, but is merely an economic benefit to increase the tax-bearing capacity. Since the transfer is prohibited, it is difficult to view that the Stockholm option itself is an economic benefit equivalent to the difference between the share price at the time of the exercise and the exercise price at the time of the exercise, and thus, it can be deemed that the economic option is transferred from the company at the time of the exercise of the Stockholm option to the company at the time of the exercise of the option, as seen earlier, and thus, it cannot be deemed as an economic option independent from the tax-bearing capacity.
3) Meanwhile, Article 39(1) of the Income Tax Act provides that "the year to which the total amount of income and necessary expenses of a resident accrue shall be the year to which the date when the necessary expenses are determined, shall be the year in which the total amount of income and necessary expenses are determined." Thus, the profit at the time of the Stockholm option is the profit acquired at lower than the market price and its own profit does not yet be cashized, and there may be changes in the scale of final profit depending on the price of the stock disposal in the future. However, in order for the income to be determined in the year to which the income belongs pursuant to the above provision, it is not necessary to realize the income in a specific case by taking into account the management of the income, the degree of objectiveization of the income generated, and the timing of securing the taxpayer's fees, and it is appropriate to deem that the profit at the time of exercising the Stockholm option or that it is possible to freely dispose of the stocks acquired by the plaintiffs.
4) If so, the Stockholm option exercise profit is deemed to constitute earned income in the taxable period to which the time of its exercise belongs, and thus, the instant taxation disposition that deemed the taxable object as the exercising profit in the Stockholm option is lawful.
(E) Whether legal grounds for the instant taxation disposition exist
1) In 196 to 200, the time when the plaintiffs exercised Stockholm options, there was no direct and express provision on Stockholm options under the Income Tax Act and the Enforcement Decree thereof. Since Article 38(1) of the Enforcement Decree of the amended Enforcement Decree explicitly stated the profits from the exercise of Stockholm options as non-income and Article 5 of the amended Enforcement Decree provides that "the amended provisions of Article 38(1) of the amended Enforcement Decree shall apply from the income accrued during the taxable period in which the date of promulgation falls." Thus, it may be problematic whether there is a legal basis for the instant taxation.
2) In full view of the provisions of Article 20 of the Income Tax Act and Article 38(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 17825, Dec. 30, 2002; hereinafter “former Enforcement Decree”), it is interpreted that the scope of earned income subject to income tax is, in principle, determined under Article 20 of the Income Tax Act, and the scope of earned income under Article 38(1) of the former Enforcement Decree shall include the following income in Article 20 of the Income Tax Act. Since it is interpreted that the provision of Article 38(1) of the former Enforcement Decree before the amendment is listed as a category of earned income, it cannot be deemed that the provision of Article 38(1) of the former Enforcement Decree is a provision that limits the type of earned income.Furthermore, considering that Article 5 of the former Enforcement Decree of the Income Tax Act comprehensively provides that earned income cannot be taxed as earned income for exercising options prior to the amendment of the Enforcement Decree, Article 8(1) of the former Enforcement Decree of the same Act shall not be construed to be construed to be construed for the foregoing fear.
3) Therefore, regardless of the application of Article 5 of the Addenda to the Enforcement Decree of the amended Act, each of the instant dispositions is a legitimate disposition based on Article 20(1) of the Income Tax Act (amended by Act No. 5195, Dec. 30, 1996). Article 13-2(1) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 5195, Dec. 30, 1996), which was enforced on January 1, 1997, prior to the amended Enforcement Decree, does not regard the profits earned by an employee, such as a certain start-up corporation, as earned income by obtaining a Stockholm option meeting certain requirements, and there was a provision on the premise that the profits from exercising the Stockholm option fall under the original earned income) (F).
In order to facilitate the exercise of taxation rights and the realization of tax claims under the tax law, additional tax is an administrative legal fiction imposed as prescribed by the individual tax law in cases where a taxpayer violates various obligations, such as the time limit prescribed by the law without justifiable grounds. It is unreasonable for the taxpayer to be unaware of his/her obligations, and there is a circumstance that it is unreasonable for the taxpayer to expect the party to fulfill his/her obligations or that it is unreasonable for him/her to expect the performance of such obligations. Unless there is a justifiable reason, the failure to perform his/her obligations under the tax law should be imposed (see, e.g., Supreme Court Decision 2001Du8100, Feb. 14, 2003; 201Du8100, Feb. 14, 2003). Thus, it is difficult for the National Tax Service to recognize that the interests of the Stockholm option exercised after around 1986 fall under the income income from the exercise of taxation rights of the Plaintiffs, 201 to 280 options or interests of the Plaintiffs.
3. Conclusion
Therefore, the plaintiff's lawsuit is unlawful, and it is dismissed, and all of the remaining plaintiffs' claims except the plaintiff's maximum ○ are dismissed. Thus, the judgment of the court of first instance is just, and the plaintiffs' appeal is dismissed as it is without merit. It is so decided as per Disposition.
【Contents List】
No.
Defendant
(Disposition Office)
Time of the Stockholm option events
Stockholm option
Exercising Profits
(unit: Won)
The filing date of request for rectification
Date of Disposition
(Contents of Disposition)
global income tax seeking revocation
(unit: Won)
Amount of resident tax seeking cancellation;
(unit: Won)
1
Gangwon ○
The head of a tax office
1997
29,141,156
applicable matters
None
202,7.5
(Assessment Disposition)
(Reversion to year 1997)
12,340,800
1,234,080
1998
124,907,826
(Reversion to year 1998)
49,963,139
4,996,310
2
○ ○
The head of a tax office
1996
37,574,766
applicable matters
None
6 May 202 (Assessment Disposition)
(Reversion to year 1996)
13,621,130)
1,362,110
1997
27,907,456
(Reversion to year 1997)
10,116,820
1,011,680
1998
126,119,186
(Reversion to year 1998)
59,058,370
5,905,830
199
34,457,112
(Reversion to year 199)
16,369,240
1,636,920
3
○ ○
The head of a tax office
1998
30,441,150
applicable matters
None
July 4, 2002
(Assessment Disposition)
(Reversion to year 1998)
12,176,461
1,217,646
199
28,513,630
(Reversion to year 199)
11,405,458
1,140,545
4
○ ○
The head of a tax office
199
19,654,152
applicable matters
None
July 4, 2002
(Assessment Disposition)
(Reversion to year 199)
5,896,252
589,620
200
3,529,638
September 29, 2001
May 28, 2002
(Disposition of Refusal of Correction)
(Reversion to year 200)
10,839,179
1,083917
5
○ ○
The head of a tax office
1997
1,148,768,732
applicable matters
None
July 4, 2002
(Assessment Disposition)
(Reversion to year 1997)
452,191,030
45,219,100
6
Park ○
The head of a tax office
199
32,168,278
applicable matters
None
July 10, 2002
(Disposition of Refusal of Correction)
(Reversion to year 199)
10,346,764
1,034,670
200
95,707,888
October 17, 2001
July 10, 2002
(Assessment Disposition)
(Reversion to year 200)
35,765,249
3,576,524
7
○ Kim
The head of a tax office
199
18,849,879
applicable matters
None
June 11, 2002
(Assessment Disposition)
(Reversion to year 199)
7,539,952
753,990
8
○ Kim
The head of a tax office
199
38,539,494
applicable matters
None
May 1, 2002
(Assessment Disposition)
(Reversion to year 199)
18,910,950
1,891,090
9
○ ○
The head of a tax office
1997
20,855,106
applicable matters
None
June 24, 2002
(Assessment Disposition)
(Reversion to year 1997)
7,005,668
700,566
1998
65,336,972
(Reversion to year 1998)
23,519,042
2,351,904
10
○○
The head of a tax office
1998
17,158,928
applicable matters
None
May 1, 2002
(Assessment Disposition)
(Reversion to year 1998)
8,339,810
833,980
200
4,440,639
(Reversion to year 200)
349,960
34,990
11
○ ○
The head of a tax office
1997
38,177,768
applicable matters
None
June 20, 2002 (Assessment Disposition)
(Reversion to year 1997)
12,024,910
1,202,490
12
Han ○
The head of a tax office
1997
45,652,240
applicable matters
None
July 2, 2002
(Assessment Disposition)
(Reversion to year 1997)
16,636,294
1,663,620
13
20
The head of a tax office
1997
21,598,445
applicable matters
None
July 8, 2002
(Assessment Disposition)
(Reversion to year 1997)
4,870,478
487,040
199
40,783,018
(Reversion to year 199)
11,163,616
1,116,360
No.
Defendant
(Disposition Office)
Stockholm option
Time of the event
Stockholm option
Exercising Profits
(unit: Won)
The filing date of request for rectification
Date of Disposition
(Contents of Disposition)
global income tax seeking revocation
(unit: Won)
Amount of resident tax seeking cancellation;
(unit: Won)
14
○ Kim
The head of a tax office
1997
66,302,527
applicable matters
None
June 20, 2002
(Assessment Disposition)
(Reversion to year 1997)
10,408,779
1,040,870
15
○ ○
The head of a tax office
199
174,890,543
applicable matters
None
June 7, 2002
(Assessment Disposition)
(Reversion to year 1996)
48,131,700
4,813,170
16
○ ○
The head of a tax office
1996
1,396,601
applicable matters
None
June 7, 2002
(Assessment Disposition)
(Reversion to year 1996)
418,981
41,890
1997
48,842,298
(Reversion to year 1997)
18,978,375
1,897,830
1998
309,595,740
(Reversion to year 1998)
121,591,735
12,159,170
199
145,616,577
(Reversion to year 199)
58,054,631
5,805,460
17
○ ○
The head of a tax office
1996
45,848,260
applicable matters
None
June 7, 2002
(Assessment Disposition)
(Reversion to year 1996)
18,339,304
1,833,930
1997
679,202,085
(Reversion to year 1997)
271,680,837
27,168,080
1998
166,073,239
(Reversion to year 199)
66,429,302
6,642,930
199
282,205,637
(Reversion to year 199)
12,882,258
11,288,220
18
Han ○
The head of a tax office
199
1,983,390
applicable matters
None
June 7, 2002
(Assessment Disposition)
(Reversion to year 199)
590,830
59,080
19
○ ○
The head of a tax office
1998
72,767,631
applicable matters
None
June 7, 2002
(Assessment Disposition)
(Reversion to year 1998)
26,778,930
2,677,890
199
297,603,988
(Reversion to year 199)
18,707,460
11,870,740
20
00
The head of a tax office
1998
67,496,247
applicable matters
None
June 7, 2002
(Assessment Disposition)
(Reversion to year 1998)
12,607,961
1,260,790
199
427,510,534
(Reversion to year 199)
106,003,290
10,600,320
21
Gangwon ○
The head of a tax office
199
11,184,376
applicable matters
None
June 7, 2002
(Assessment Disposition)
(Reversion to year 199)
3,355,320
35,530
22
door-○
The head of a tax office
199
7,196,366
applicable matters
None
June 7, 2002
(Assessment Disposition)
(Reversion to year 199)
2,158,910
215,890
23
Maap○
The head of a tax office
1996
82,054,199
applicable matters
None
June 7, 2002
(Assessment Disposition)
(Reversion to year 1996)
32,822,134
3,282,210
1997
191,59,393
(Reversion to year 1997)
76,927,759
7,692,770
1998
194,920,688
(Reversion to year 1998)
7,968,530
7,796,850
24
○ Kim
The head of a tax office
1998
15,813,000
applicable matters
None
June 7, 2002
(Assessment Disposition)
(Reversion to year 1998)
3,706,993
370,690
199
16,924,353
(Reversion to year 199)
4,229,738
422,970
25
Park ○
The head of a tax office
199
17,226,518
applicable matters
None
June 7, 2002
(Assessment Disposition)
(Reversion to year 199)
5,167,963
516,790
26
Park ○
The head of a tax office
199
70,133,794
applicable matters
None
June 7, 2002
(Assessment Disposition)
(Reversion to year 199)
25,293,137
2,529,310
27
Maap○
The head of a tax office
199
8,035,906
applicable matters
None
June 7, 2002
(Assessment Disposition)
(Reversion to year 199)
2,054,124
205,410
28
○ ○
The head of a tax office
1997
83,348,769
applicable matters
None
April 1, 2002
(Assessment Disposition)
(Reversion to year 1997)
35,526,940
3,552,690
1998
218,081,355
(Reversion to year 1998)
109,568,050
10,956,800
199
26,993,651
(Reversion to year 199)
15,141,670
1,514,160
200
3,471,376
(Reversion to year 200)
1,878,010
187,800
No.
Defendant
(Disposition Office)
Stockholm option
Time of the event
Stockholm option
Exercising Profits
(unit: Won)
The filing date of request for rectification
Date of Disposition
(Contents of Disposition)
global income tax seeking revocation
(unit: Won)
Amount of resident tax seeking cancellation;
(unit: Won)
29
Ansan ○
The head of a tax office
1998
125,670,948
applicable matters
None
April 1, 2002
(Assessment Disposition)
(Reversion to year 1998)
62,663,170
6,266,310
200
76,585,038
December 8, 2001
May 29, 2002
(Disposition of Refusal of Correction)
(Reversion to year 200)
25,335,118
2,533,510
30
○ Kim
The head of a tax office
199
17,711,095
applicable matters
None
June 22, 2002
(Assessment Disposition)
(Reversion to year 199)
7,084,444
708,440
31
Hyo
The head of a tax office
1998
54,252,878
applicable matters
None
June 22, 2002
(Assessment Disposition)
(Reversion to year 1998)
19,806,499
1,980,640
32
○ ○
The head of a tax office
1997
69,418,340
applicable matters
None
June 22, 2002
(Assessment Disposition)
(Reversion to year 1997)
20,793,354
2,079,330
1998
131,351,438
(Reversion to year 1998)
48,321,844
4,832,180
33
○ ○
The head of a tax office
199
5,847,719
applicable matters
None
June 15, 2002
(Assessment Disposition)
(Reversion to year 199)
2,339,088
233,900
34
Park ○
The head of a tax office
1998
24,230,319
applicable matters
None
6 May 200
(Assessment Disposition)
(Reversion to year 1998)
7,269,096
726,909
199
24,485,713
(Reversion to year 199)
7,345,714
734,571
35
o○
The head of a tax office
199
23,161,741
applicable matters
None
June 14, 2002
(Assessment Disposition)
(Reversion to year 199)
8,317,356
831,730
36
○ Kim
The head of a tax office
199
35,576,030
applicable matters
None
June 14, 2002
(Assessment Disposition)
(Reversion to year 199)
10,330,746
1,033,070
37
OO
The head of a tax office
200
38,642,654
October 16, 2001
May 21, 2002
(Disposition of Refusal of Correction)
(Reversion to year 200)
13,363,146
1,336,310
38
○ ○
The head of a tax office
200
51,276,058
October 7, 2001
November 30, 2001
(Disposition of Refusal of Correction)
(Reversion to year 200)
18,824,392
1,882,439
39
○○
The head of a tax office
200
20,878,574
September 29, 2001
March 6, 2002
(Disposition of Refusal of Correction)
(Reversion to year 200)
5,554,400
55,440
40
Park ○
The head of a tax office
200
25,170,773
applicable matters
None
April 29, 2002
(Assessment Disposition)
(Reversion to year 200)
6,273,314
627,330
41
○ ○
The head of a tax office
1996
14,303,244
applicable matters
None
April 1, 2002
(Assessment Disposition)
(Reversion to year 1996)
2,158,840
215,880
1997
137,718,360
(Reversion to year 1997)
62,918,500
6,291,850
199
291,762,936
(Reversion to year 199)
177,802,970
17,780,290
42
Hyo
The head of a tax office
199
57,830,354
applicable matters
None
June 1, 2002
(Assessment Disposition)
(Reversion to year 199)
32,464,340
3,246,430
43
○ ○
The head of a tax office
199
24,478,140
applicable matters
None
June 1, 2002
(Assessment Disposition)
(Reversion to year 199)
10,306,180
1,030,610
44
○ Kim
The head of a tax office
1998
9,013,953
applicable matters
None
June 1, 2002
(Assessment Disposition)
(Reversion to year 1998)
3,245,020
324.500
199
35,202,351
(Reversion to year 199)
16,419,960
1.641.990
200
23,180,580
(Reversion to year 200)
9,607,550
960.750
No.
Defendant
(Disposition Office)
Stockholm option
Time of the event
Stockholm option
Exercising Profits
(unit: Won)
The filing date of request for rectification
Date of Disposition
(Contents of Disposition)
global income tax seeking revocation
(unit: Won)
Amount of resident tax seeking cancellation;
(unit: Won)
45
○ ○
The head of a tax office
1998
95,040,645
applicable matters
None
June 1, 2002
(Assessment Disposition)
(Reversion to year 1998)
48,113,920
4,811,390
199
19,624,969
(Reversion to year 199)
74,813,450
7,481,340
200
192,872,565
(Reversion to year 200)
106,542,800
10,654,280
46
door-○
The head of a tax office
1998
2,226,690
applicable matters
None
July 1, 2002
(Assessment Disposition)
(Reversion to year 1998)
631,990
63,200
199
11,299,873
(Reversion to year 199)
5,134,330
513,430
47
○ ○
The head of a tax office
199
37,936,085
applicable matters
None
July 1, 2002
(Assessment Disposition)
(Reversion to year 199)
20,682,290
2,068,220
[List of Companies]
No.
Plaintiff
Domestic Subsidiaries
A foreign mother company
Ratio of Shares
1
Gangwon ○
○ Stock Company
○
100%
2
○ ○
○ Limited Liability Company
○
100%
3
○ ○
○ Stock Company
(former Trade Name: ○○ Stock Company)
○
5% to 85%
4
○ ○
○ Stock Company
○
100%
5
○ ○
○○ Co., Ltd.
○
100%
6
Park ○
○○ Co., Ltd.
○
100%
7
○ Kim
○ Stock Company
○
100%
8
○ Kim
○
○
100%
9
○ ○
○ Stock Company
○
100%
10
○○
○ Stock Company
○
100%
11
○ ○
○ Stock Company
○
100%
12
Han ○
○ Stock Company
○
100%
13
20
○ Stock Company
(former Trade Name: Stock Company)
○
5% to 85%
14
○ Kim
○ Limited Liability Company
○
100%
No.
Plaintiff
Domestic Subsidiaries
A foreign mother company
Ratio of Shares
15
○ ○
○ Limited Liability Company
○
○
100%
16
○ ○
○ Stock Company
○
○
100%
17
○ ○
○ Stock Company
○
○
100%
18
Han ○
○ Stock Company
○
○
100%
19
○ ○
○ Stock Company
○
○
100%
20
00
○ Stock Company
○
○
100%
21
Gangwon ○
○ Stock Company
○
○
100%
22
door-○
○ Stock Company
○
○
100%
23
Maap○
○ Stock Company
○
○
100%
24
○ Kim
○ Stock Company
(former Trade Name: ○○ Stock Company)
○
○
5% to 85%
25
Park ○
○ Stock Company
(former Trade Name: ○○ Stock Company)
○
○
5% to 85%
26
Park ○
○ Stock Company
(former Trade Name: ○○ Stock Company)
○
○
5% to 85%
27
Maap○
○ Limited Liability Company
○
○
100%
28
○ ○
○ Stock Company
○
○
100%
29
Ansan ○
○ Stock Company
○
○
100%
30
○ Kim
○ Stock Company
○
○
100%
31
Hyo
○ Stock Company
○
○
100%
No.
Plaintiff
Domestic Subsidiaries
A foreign mother company
Ratio of Shares
32
○ ○
○○ Co., Ltd.
○
○
100%
33
○ ○
○ Stock Company
○
○
100%
34
Park ○
○ Stock Company
○
○
100%
35
o○
○ Stock Company
○
○
100%
36
○ Kim
○ Stock Company
(Change: ○○ Stock Company)
○
○
5% to 85%
37
OO
○ Stock Company
○
○
100%
38
○ ○
○ Stock Company
○
○
100%
39
○○
○ Stock Company
○
○
100%
40
Park ○
○ Stock Company
○
○
100%
41
○ ○
○ Stock Company
○
○
100%
42
Hyo
○ Stock Company
○
○
100%
43
○ ○
○ Stock Company
○
○
100%
44
○ Kim
○ Stock Company
○
○
100%
45
○ ○
○
○
○
100%
46
door-○
○
○
○
100%
47
○ ○
○
○
○
100%